123 Report of Defence Committee Submitted to Cabinet by Hasluck and FairHall1

Canberra, 26 April 1968

Top Secret

Non-Proliferation Treaty

Introduction

In its previous considerations of the Non-Proliferation Treaty, Cabinet decided (Decision No. 95)2 that 'the principle of the Non-Proliferation Treaty should be supported and that Australia should make genuine effort in the interests of a workable Treaty which she could sign … Cabinet preferred to hasten slowly (and agreed) that the course to be explored further at this stage was along the lines of that suggested at para. 97c' (of the Defence Committee Report, viz., 'to indicate a willingness to sign an effective Treaty subject to certain understandings, qualifications and amendments'). 'This course would be to welcome in principle the objective of a non-Proliferation Treaty and to express the hope that an effective way to achieve this objective might be found' ... It was agreed that the matters set out in paragraph 104 of the (Report) were indicative of the matters which the Cabinet views with concern.

2. In Decision No. 1193 Cabinet sought 'precision as to the points on which Australia should have assurances or on which amendments should be sought or supported, and also as to the conditions in respect of which Australia would need to be satisfied before signature could be contemplated'.

3. This paper prepared by the Defence Committee augmented by other relevant departmental representatives is directed to the points raised by Cabinet. In particular it covers matters set out in paragraph 104 referred to above.

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Efficacy of the Treaty

12.

  1. Degree of Support: For the Treaty to be effective, it will be essential that it not only attract the forty ratifications required by Article IX, but that these should include the bulk of those nations capable of early development of nuclear weapons, which, in Australia's region, are India, Pakistan and Japan. In practice it will be necessary to assess the significance of a refusal to sign in terms of the motives, capacity and character of the nonsignatory, and the degree to which its non-adherence militates against the effectiveness of the Treaty. For Australia, the adherence of Indonesia which, though not capable of early development of nuclear weapons, might conceivably require them, e.g. from Communist China, would be of special significance.

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Impact on australia's commercial interests

13. Australia has a large stake in the free development of, e.g. uranium deposits, beach sands, etc. Already production of these is significant. All the indications point to a rapid expansion of such mining activities and of treatment plants and, as well, the development of facilities for producing derivative metals. So our present exports in these fields could multiply.

14. Australia as a party to the Treaty, would be precluded from exporting source or special fissionable material to any non nuclear weapon States unless that material were subject to the safeguards required by the Treaty (the U.S.S.R. view may be-unless the States are parties to the Treaty). Unless therefore countries which are already or are potentially likely to be large purchasers of such material, e.g. Japan, were prepared to subject the material to safeguards (or were parties to the Treaty), Australia could be denied valuable markets in these countries. Thus, on this score also, Australia must be concerned in relation to the countries which ratify the Treaty.

Manufacture

15. The interpretation to be given to the word 'manufacture' in relation to nuclear weapons and nuclear explosive devices which is prohibited by Articles I and II4 of the Treaty is of paramount importance to Australia. Australia has a fundamental national interest in preserving the maximum scope for nuclear research, development and production for peaceful uses and indeed development for non-explosive military purposes. It also has an interest in preserving the scope to develop to the maximum extent possible without breach of the Treaty, its potential to manufacture nuclear weapons, should it decide that circumstances so require. Australia must, at the same time be prepared to accept arrangements under the Treaty that offer equal protection to the similar national interests of other States.

16. The American team stated that 'manufacture' would not include any research, development, production or use for which there was a conceivable peaceful intent, whether or not such activities advanced a State's capacity to manufacture nuclear weapons. In particular, they declared that any work on the enrichment of fissionable materials would fall outside the scope of 'manufacture', whether the enriched material was used or stockpiled for further use. On this basis, the provisions of Articles I and II of the Treaty would not prejudice a country's civilian programme of nuclear development for peaceful purposes other than in respect of nuclear explosives. This programme could proceed subject to safeguards.

17. Regarding nuclear research, development, production and use directed to the advancement of a country's capacity ultimately to manufacture nuclear weapons, the Americans initially agreed that the provisions of the Treaty would not prevent a State from advancing to a point just short of final manufacture. In further discussion it emerged that they would consider some preparatory work associated with the actual creation of an explosive device (which they were not prepared to define) properly as an integral part of manufacture and therefore forbidden. They were uncertain as to the precise point in nuclear work at which the Treaty's provisions would operate. They thought this would be established by the consideration of specific cases over the years, particularly in the IAEA. Recalling that there is no provision for definitive interpretation of 'manufacture', there is clearly, in this field, an uncertain 'grey area'.

18. However, taking the American view as the basis, the provisions of the Treaty would permit a Party to make very substantial progress towards the manufacture of nuclear weapons. In Australia's case it is currently assessed that it would mean that, without breach of the Treaty, it would be possible to reduce the lead time for weapons production to approximately three years.

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20. The Australian delegation should ensure that the American interpretation is clearly understood in the United Nations and is supported by the Soviet Union and Britain, and is not opposed or seriously questioned, by any significant power. If this is the outcome, it will be satisfactory to Australia.

SAFEGUARDS

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Possibility of Industrial Espionage

25. The possibility of industrial espionage by IAEA inspectors has been a major source of concern and it has been felt that primary producing countries of source material, such as Australia, would be particularly exposed to this risk.

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31. At present, there is a right to reject particular IAEA Inspectors. This should be retained.

Materials, Plant, etc.

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35. The Australian delegation should, in the United Nations debate, seek to have all ores, minerals, mines and ore treatment plants excluded from safeguards. In this connection, Canada has taken the position that its activities on the mining and refining of uranium source material will not be subject to safeguards.

36. Article XX of the IAEA Statute, having given certain definitions of the terms 'source material' and 'special material' provides that they will include 'such other material as the Board of Governors shall from time to time determine.' A similar definition applies to the term 'principal nuclear facility' in the IAEA Safeguards Document.

37. These definitions are acceptable to Australia because it is clear that other items will have to be added in the future in the light of technological changes. Australia will watch developments in this respect closely and want to satisfy itself that each proposal to extend the definitions is well founded.

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Deposit of Excess Material with the IAEA

45. Article XII A.5 of the IAEA Statute requires 'deposit with the Agency of any excess of any special fissionable material recovered or produced as a by-product over what is needed ... in order to prevent stockpiling of these materials, provided that thereafter at the request of the member (State) concerned ... materials so deposited ... shall be returned promptly ... for use under the same provisions (safeguards)'. This provision contrasts with the American team's statement that under the Treaty, Parties would be permitted to stockpile enriched uranium (of any enrichment) to any extent desired-subject of course to safeguards. The Americans pointed out that the Statute provision had never been implemented and that they now saw no reason, within the context of the Treaty to do so. They also agreed that the deposit procedure could prove costly and technically difficult if it involved transfer and storage of the material outside its country of origin.

46. The Australian delegation should seek to have the above understandings confirmed not only by the Treaty's proposers but by Britain and other significant countries. At the same time, the delegation should resist any suggestions that Article XII A.5 should be implemented as a consequence of the application of the Treaty; in particular, the delegation should oppose any suggestion to establish IAEA depositories that would involve the export of the materials.

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Costs

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49. The distribution of costs will be important. The American team took for granted that the U.S.A. would bear 30%. The Soviet attitude to date, it is understood, has been that costs of safeguards should be borne by those to whom the safeguards are applied. In this case the cost to Australia could, in future, be considerable. The American team expressed the view that the Soviet would find it difficult to sustain its previous attitude in view of its position as cosponsor of the Non-Proliferation Treaty which makes safeguards mandatory.

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Regional Groupings

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53. The likely advantages and disadvantages of Australia seeking to form an international group need careful study.

Amendments to the IAEA Statute and/or Safeguards

54. There have been questions whether the provisions of the Non-Proliferation Treaty are consistent with the IAEA Statute and/or safeguards system and whether the coming into force of the Treaty will require renegotiation of either or both the IAEA instruments.

55. The American team agreed that there were some inconsistencies between the Treaty and the Statute, but pointed out that only certain parts of the Statute would be relevant to the Treaty: these were consistent with the Treaty and no requirement to re-negotiate the Statute arose.

56. This is also the Australian view. Furthermore, re-negotiation of the Statute would open up a variety of issues and create difficulties for Australia and the general membership. Any suggestions during the U.N. debate to re-negotiate the IAEA Statute should therefore be resisted.

57. It may, however, be necessary to adapt the safeguards system to the requirements of the Treaty. Any changes are likely to affect Australian interests and it is important that as far as possible we know in advance precisely what they will be. Secondly, the IAEA safeguards system applied under the Treaty should be as uniform as possible in their provisions for all Parties. The Australian delegation should press the view (and seek support for its adoption in the Debate) that a model safeguards agreement be drawn up and approved in the IAEA before negotiations are undertaken with individual Parties for the safeguards agreements under Article III of the Treaty.

58. The American team confirmed that later amendments to the IAEA Statute and/or safeguards system inevitably arising from technological developments would be mandatory on Parties to the Treaty. They said that the Parties' interests would be protected by the difficulty of securing amendments that conflicted with the interests of the majority.

59. In our view this puts it too glibly. Amendments to the Statute may be proposed by any Member. They come into force for all members when approved by the General Conference by a two thirds majority after consideration of observations submitted by the Board of Governors on each proposed amendment. On the other hand, amendments of the safeguards systems can be made by the Board by two thirds voting majority, and in the past amendments have only been incorporated in safeguards agreements by consent of the Governments involved. In these circumstances the proposed model safeguards agreement (paragraph 57) should itself contain satisfactory provisions dealing with the circumstances in which safeguards can be extended.

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Espionage Security Risks

62. In a letter5 to the Prime Minister dated 7th March, 1968, the Director General of Security advised against Australia entering the proposed Treaty. His concern was that, if Australia became a party, Inspectors who were from, e.g. Communist countries, would be well placed to engage in espionage. Representatives of ASIO will meet with representatives of the Departments of Defence and Supply and the Atomic Energy Commission for an examination of the security aspect in light of what has become known since the Director General's letter was written.6 Since this current paper is concerned merely with the brief for the Australian delegation during the U.N. Debate, further consideration of the security aspects will not be prejudiced.

Peaceful Nuclear Explosions

63. The Americans gave an assurance that the Treaty sponsors intended that the 'appropriate international procedures' should ensure that nuclear explosives for peaceful purposes would not be withheld because of political or economic interests. The Australian delegation should press for assurances that this will be the rule followed by all member States. It should also support the concept that nuclear explosives for peaceful purposes can be supplied on a bilateral basis and stress that international surveillance should be limited to safety aspects and procedures to ensure that the explosions would not further the development of nuclear weapons.

Withdrawal

64. Article XI of the Treaty lays down a Party's right to withdraw from the Treaty 'if it decides that extraordinary events, related to the subject matter of the Treaty, have jeopardised the supreme interests of its country.' Three months' advance notice and a statement of the 'extraordinary events' are required.

65. The American team pointed out that as no interpretations were provided in the Treaty and no arrangements existed for providing rulings or for enforcing provisions of the Treaty, this Article left it open to a Party to provide its own interpretation. However, the team's personal view was that the intention was to limit the legitimate circumstances of withdrawal to a nuclear threat; withdrawal in other circumstances could properly be challenged by other Parties and lead to restraint by political action, measures by the Security Council, etc.

66. Article XI is open to most criticism by States anxious about their security in the face of a superior conventional threat and unsupported by alliance with a major nuclear power. However, to allow such countries to withdraw from the Treaty, on their own assessment of the threats facing them, and manufacture nuclear weapons would very seriously reduce the effectiveness of the Treaty. Australia's concern on this point is allayed to the extent that America's continuing national interests as a global and Pacific power mean the continuing validity of its alliances with Australia.

67. Australia's interests would be served by an effective Non-Proliferation Treaty and by the continued strategic involvement of America in Asia and the Pacific that the effective prevention of proliferation would require. From Australia's point of view it would however be undesirable for an interpretation as in paragraph 65 above, limiting the legitimate circumstances of withdrawal to a nuclear threat, to be aired, let alone placed on the record.

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The Proposed Security Council Resolutions

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71. America could come to the aid of Australia under the ANZUS Treaty, but this is already the case. So the real protection which Australia enjoys continues to derive from the Treaty.

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Conclusion

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86. It is considered that the delegation should express Australia's full support in principle for an effective Treaty. It should deal with the matters which earlier paragraphs have said the Australian delegation should attend to. (For special consideration by Ministers is what, if anything, should be said on the question of the term of this Treaty). During the course of the debate, it could be necessary for Australia to speak regarding particular points of interpretation, or to arrange for other countries to secure acceptance of interpretations Australia favours. Naturally the Australia delegation will be sounding out the attitudes and intentions of other countries and particularly those of Japan, India, Pakistan and Indonesia.

87. While if the foregoing generally has the endorsement of Ministers and things work out satisfactorily in the U.N. Debate, Australia could, prima facie, vote for the Treaty, it will be necessary for Ministers to decide later the question of our Vote.

88. As earlier stated the question whether Australia should sign the Treaty, and when and on what conditions (if any) is one that will call for consideration by Ministers in light of all relevant circumstances. The matter of ratification will be for subsequent consideration.

[NAA: A1838, 680/10/2 part 4]